Governments worldwide are placing an emphasis on reducing their countries’ carbon footprints amid rising concerns regarding climate change as experts continue to warn about the severe consequences of global warming. For example, President Biden’s 2022 budget proposal plans to invest more than $36 billion to fight global climate change, which is an increase of more than $14 billion versus 2021. This is in line with the President’s plan to slash the U.S.’ carbon emissions in half by 2030.
In addition, amid the rising popularity of ESG investing, several companies are racing to streamline their business operations to reduce their carbon emissions.
Given this backdrop, Apple Inc. (AAPL), PepsiCo, Inc. (PEP), International Business Machines Corporation (IBM), FedEx Corporation (FDX), and Parker-Hannifin Corporation (PH) are working actively to achieve carbon neutrality and hence we think are sustainable investment bets now.
Apple Inc. (AAPL)
AAPL is biggest technology company in the world. It designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide.
In July 2020, AAPL announced its plan to become carbon neutral across its entire business and manufacturing supply chain by 2030. The company aims to work actively to control carbon emissions by increasing the use of low carbon and recycled materials in its products, expanding its energy efficiency, and moving its entire supply chain to renewable energy sources.
For its fiscal third quarter, ended June 26, AAPL’s revenues increased 36.4% year-over-year to $81.43 billion. This represented record June-quarter revenue. Its operating income and net income improved 84.3% and 93.2%, respectively, from the same period last year to $24.13 billion and $21.74 billion. And its EPS came in at $1.30, reflecting a 100% rise from the prior-year quarter.
Analysts expect AAPL’s revenues to increase 30.7% year-over-year to $84.58 billion in the current quarter, ending September 2021. A $1.22 consensus EPS estimate for the current quarter indicates a 67.1% rise from the same period last year. AAPL also surpassed the Street’s EPS estimates in each of the trailing four quarters.
Shares of AAPL have gained 31.1% over the past year and 13.2% year-to-date.
It is no surprise that AAPL has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock also has a B grade for Sentiment and Quality. Among the 45 stocks in the Technology - Hardware industry, AAPL is ranked #21.
To see additional AAPL ratings for Growth, Value, Stability, and Momentum, click here.
PepsiCo, Inc. (PEP)
PEP is a food and beverage company operating in more than 200 countries. The company operates through seven segments: Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; Africa, Middle East and South Asia; and Asia Pacific, Australia and New Zealand and China.
In January, PEP pledged to achieve net-zero emissions by 2040. To achieve its goal, the company plans to invest in sustainable agriculture and regenerative practices, reduce its use of virgin plastic, implement and upgrade environmentally sustainable manufacturing, warehousing, transportation, and distribution sites, and actively utilize renewable energy sources.
PEP’s net revenues increased 20.5% year-over-year to $19.22 billion in its fiscal second quarter, ended June 12. Its operating profit grew 34.9% from its year-ago value to $3.13 billion. PEP’s net income came in at $2.37 billion, indicating a 43.1% rise year-over-year. In addition, the company’s EPS increased 44.1% year-over-year to $1.70.
The Street expects PEP’s revenues to increase 6.8% year-over-year to $19.32 billion in its fiscal third quarter, ending September 2021. A $1.72 consensus EPS estimate for the current quarter indicates a 3.6% rise from the same period last year. PEP also has a notable earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters.
Shares of PEP have gained 15.5% over the past six months. The stock gained 13.2% over the past year.
PEP’s performance is reflected in its POWR Ratings. It has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. PEP also has a B grade for Stability, Sentiment, and Quality. Of the 37 stocks in the Beverages industry, it is ranked #11.
To see additional POWR Ratings for Growth, Momentum, and Value, click here.
International Business Machines Corporation (IBM)
IBM provides integrated solutions and services worldwide. The company operates through five segments: Cloud & Cognitive Software; Global Business Services; Global Technology Services; Systems; and Global Financing.
By 2030, IBM plans to achieve net-zero greenhouse gas emissions. In February, the company shared its plan to reduce greenhouse emissions by using energy from renewable sources and utilizing technologies like carbon capture to account for any remaining emissions.
IBM’s total revenues increased 3.4% year-over-year to $18.75 billion in its fiscal second quarter, ended June 30. Its gross profit grew 3.5% from its year-ago value to $9.00 billion. Its non-GAAP income from continuing operations came in at $2.10 billion, reflecting a 7.9% increase year-over-year. The company’s non-GAAP EPS increased 6.9% year-over-year to $2.33.
IBM’s revenues are expected to increase 2.1% year-over-year to $75.13 billion in the current year. The $10.77 consensus EPS estimate for the current year indicates a 24.2% rise versus the last year. IBM also surpassed the consensus EPS estimates in three out of the trailing four quarters.
Shares of IBM have gained 15.5% in price over the past six months and 10.8% year-to-date.
The company has an overall B rating, which translates to Buy in our proprietary POWR Ratings system. The stock also has a B grade for Momentum, Value, and Quality. IBM is ranked #16 in the Technology – Hardware industry.
Get additional IBM ratings for Growth, Stability, and Sentiment, click here.
FedEx Corporation (FDX)
FDX provides transportation, e-commerce, and business services in the United States and internationally. The company operates primarily through four segments: FedEx Express; FedEx Ground; FedEx Freight; and FedEx Services.
In March, FedEx announced its goal of achieving carbon-neutral operations globally by 2040. The company also unveiled its plan to designate more than $2 billion for vehicle electrification, investments in sustainable energy, and carbon sequestration.
FDX’s total revenue increased 30% year-over-year to $22.57 billion in its fiscal fourth quarter, ended May 31. The revenue increase was driven primarily by strong growth in business-to-business shipments. Its operating income grew 278% from its year-ago value to $1.80 billion, while its net income improved 659.3% year-over-year to $1.87 billion over the period. The company’s EPS increased 637.5% year-over-year to $6.88.
A $90.97 billion consensus revenue estimate for the current year indicates an 8.4% improvement from the last year. Analysts expect the company’s EPS to come in at $21.24 in the current year, representing a 16.9% rise year-over-year. Furthermore, FDX beat the Street’s EPS estimates in each of the trailing four quarters.
Over the past year, the stock gained 31.8% to close yesterday’s trading session at $272.76. FDX has gained 5.1% year-to-date.
FDX has an overall B rating, which equates to Buy in our proprietary rating system. In addition, FDX has a B grade for Quality and Value. It is ranked #7 among the 16 stocks in the Air Freight & Shipping Services industry.
Beyond what we’ve stated above, we have also rated FDX for Growth, Sentiment, Momentum, and Stability. Click here to view all FDX ratings.
Parker-Hannifin Corporation (PH)
PH manufactures and sells motion and control technologies and systems worldwide for mobile, industrial, and aerospace markets. The company operates through two segments: Diversified Industrial and Aerospace Systems.
In its latest Sustainability Report, PH announced its commitment to achieving neutral carbon operations by 2040. This long-term strategy includes actions to reduce energy consumption, investments in renewable energy, and working closely with suppliers to further reduce energy use and emissions. The 2020 Sustainability Report also highlights PH’s range of highly efficient products and systems engineered to help customers reduce resource consumption and greenhouse gas emissions.
PH generated record financial performance in its fiscal year 2021, setting all-time highs for sales, net income, earnings per share, segment operating margins, and cash flow from operations. PH’s net sales increased 25.3% year-over-year to $3.96 billion in its fiscal fourth quarter, ended June 30. Its net income stood at $504.79 million, up 74.4% from the same period last year. Its EPS grew 72% from its year-ago value to $3.84. Its full-year cash flow from operations rose 24.3% from the prior-year quarter to $2.58 billion over this period.
A $3.72 billion consensus revenue estimate for its fiscal first quarter (ending September 2021) represents a 15.1% increase year-over-year. The Street expects the company’s EPS to rise 23% from the prior-year quarter to $3.78 in the current quarter. Also, PH surpassed the consensus EPS estimates in each of the trailing four quarters.
PH gained 9.2% in price over the past six months to close yesterday’s trading session at $293.06. The stock has gained 41.8% over the past year.
PH has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. Of 90 stocks in the Industrial – Equipment industry, PH is ranked #30.
Click here to view additional PH ratings for Growth, Quality, Momentum, Value, Sentiment, and Stability.
Click here to check out our Industrial Sector Report for 2021
AAPL shares fell $0.05 (-0.03%) in after-hours trading Thursday. Year-to-date, AAPL has gained 11.08%, versus a 18.42% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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